(,1 2 1/,1( - profligate grace18 see, e.g., stephen jay gould, wonderful life: the burgess shale and...

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THE ANTITRUST BULLETIN: Vol. 51, No. 1/Spring 2006 : 195

Competition or monopoly?The implications of complexity science,chaos theory, and evolutionary biology

for antitrust and competition policy

BY THOMAS J. HORTON*

I. INTRODUCTION

Predicting the competitive and economic impacts of business conductand relationships1 ranging from horizontal marketing joint venturesto vertical restraints demands an assessment and understanding of"immeasurable dynamic relationships." 2 Despite the assiduous effortsof economists and lawyers to bring order and predictability to thecompetitive effects evaluation process, antitrust regulation and

* Member of the bar of Ohio and the District of Columbia.

AUTHOR'S NOTE: I wish to thank Dr. Mariano A. Gracia-Blanco for his helpfulcomments.

I See N. Pac. Ry. Co. v. U. S., 356 U.S. 1, 4 (1958) ('The Sherman Act wasdesigned to be a comprehensive charter of economic liberty aimed at preservingfree and unfettered competition as a rule of trade. It rests on the premise thatunrestrained interaction of competitive forces will yield the best allocation ofour economic resources, the lowest prices, the highest quality, and the greatestnational progress, while at the same time providing an environment conduciveto the preservation of our democratic political and social institutions.")

2 EDWARD 0. WILSON, CONSILIENCE: THE UNITY OF KOWLEDGE 92 (1999)

[hereinafter WILSON, CONSILIENCE].

© 2006 by Federal Legal Publcations, Inc.

196 THE ANTITRUST BULLETIN: Vol. 51, No. 1/Spring 2006

decisionmaking are guided as much by assumptions and valuesthey are by neutral economic or scientific principles.

Can antitrust and competition lawyers and economists loolmodem science for guidance? As shown by the surrounding AntitiBulletin articles, several commentators have recommended lookinthe emergent scientific field of complexity theory, as wellevolutionary biology. Their noble and creative efforts have buseful in emphasizing the importance of competition and diversi,creating and maintaining productive and stable economic systand in identifying potential emergent forms of economic orcContinuing efforts to employ rigorous multidisciplinary thinkinaddressing antitrust and competition issues should be encouraged.

We must be careful, however, not to misapply scientificbiological metaphors in seeking to support values-driven econoconclusions. In The Keystone Advantage,3 Marco Iansiti and Roy LeNseek to bolster Milton Friedman's and the Chicago school's efficienand concentration values-driven defense of monopoly througbiological metaphor. They argue that dominant business firmsmonopolies should be shielded from antitrust regulations becathey are analogous to keystone species in biological ecosystems.

The Keystone Advantage's biological metaphor is facicompelling, but ultimately unsupported by sound biologiprinciples or evidence. Indeed, biological studies show that ongcaggressive horizontal competition at all levels, including the keystlevel, is critical to building and maintaining healthy, stable,productive ecosystems.

Unlike biological ecosystems, our economic system is based u,voluntary contractual relationships. Fairness and ethical behaviorcrucial to maintaining the long-term health and stability ofeconomic system. Antitrust regulation of monopolies protectsintegrity of our economic system by promoting fair and ethcompetition and contractual dealings.

3 MARCO IANSITI & Roy LEVIEN, THE KEYSTONE ADVANTAGE: WHAT

DYNAMICS OF BUSINESS ECOSYSTEMS MEAN FOR STRATEGY, INNOVATION

SUSTAINABILITY (2004).

COMPETITION OR MONOPOLY? : 197

We should continue to look to the teachings of complexityscience, chaos theory, and evolutionary biology to better understandour complex competitive economic system and to identify potentialemergent forms of order. In so doing, we will gain a greaterappreciation for the importance of diversity and ongoingcompetition at all levels of our economic system. We also must keepforemost in mind that effective antitrust regulation requires acontinuing effort to delicately balance conflicting implied valuessuch as freedom and fairness, competition and collaboration, anddiversity and efficiency.

II. COMPLEXITY SCIENCE, CHAOS THEORY,AND COMPETITION

Biologist Edward 0. Wilson of Harvard University, the author oftwo Pulitzer Prize-winning books, On Human Nature (1978) and TheAnts (1990, with Bert H6Uldabler), believes that "[tihe greatest challengetoday, not just in cell biology and ecology, but in all of science, is theaccurate and complete description of complex systems."4 Complexitytheory seeks to go beyond breaking down complex systems anddescribing their underlying elements and forces, to creatingmathematical models that describe the emergent forces in a system.Born in the 1970s, complexity science aims to discover deepmathematical algorithms that will help "achieve a comprehensiveunderstanding of the higher productions of the material world."5

Complexity theory seeks to understand such complex processes asecosystems and patterns of human culture "in terms of complexdynamics from which emerge characteristic patterns of order."6

As a starting point, complexity theorists have focused primarilyon biological systems. Edward 0. Wilson notes:

Organisms and their assemblages are the most complex systems known.They are also self-assembling and adaptive. Living systems in general,by constructing themselves from molecule to cell to organism to ecosys-

4 WILSON, CONSILIENCE, supra note 2, at 93.

5 Id. at 96.6 RICHARD SOLE & BRIAN GOODWIN, SIGNS OF LIFE: How COMPLEXITY

PERVADES BIOLOGY at xi (2000).

198 : THE ANTITRUST BULLETIN: Vol. 51, No. 1/Spring 2006

tem, surely display whatever laws of complexity and emergencwithin our reach.7

In The Origins of Order,8 an ambitious and seminal worl

complexity theory, biologist Stuart Kauffman describes hov

created massive computer-aided simulations exploring a variet

possible worlds in the hopes of revealing the methods to achie

comprehensive understanding of complex systems in today's w(

Kauffman theorizes that both simple and complex systems r(

ordered states spontaneously. Consequently, to understand corn

systems, Kauffman argues that we must integrate scientific theori

self-organization and natural selection to "understand how selec

interacts with systems which have their own spontaneously ord,

properties." 9 Kauffman ultimately posits that "the evolutiol

marriage of self-organization and selection is itself governed by

selection achieves and maintains complex systems poised on

boundary, or edge, between order and chaos." 10 Within such systi

system members co-evolve successfully and "optimize their capi

to co-evolve by mutually attaining the edge of chaos."1

A. The need for caution in applying complexity science and c)theory to antitrust analyses

1. THE NEED FOR GREATER EMPIRICAL INFORMATION

Our knowledge is a little island in a great ocean of non-knowledge. 12

7 WILSON, CONSILIENCE supra note 2, at 96.

8 STUART A. KAUFFMAN, THE ORIGINS OF ORDER: SELF-ORGANIZATION

SELECTION IN EVOLUTION, xii-xvii (1993).

9 Id. at xv.

10 Id. at xv, 261. In describing the "edge of chaos," Edward 0. W

observes "that in a system containing perfect internal order, such as a cr

there can be no further change. At the extreme opposite, in a chaotic sysuch as a boiling liquid, there is very little order to change. The system thaevolve the most rapidly must fall between, and more precisely on the edchaos, possessing order but with the parts connected loosely enough to bealtered either singly or in small groups." WILSON, CONSrLIENCE, supra note 2, a

I KAUFFMANN, supra note 8, at xvi.

12 Isaac Bashevis Singer (Nobel laureate in literature), quoted in I

SUZUKI & PETER KNUDTSON, GENETHICS: THE CLASH BETWEEN THE NEW GET

AND HUMAN VALUES 329 (1990).


Complexity theory needs vastly more empirical informationand objective scientific testing before we can apply it to fields suchas economics with a high degree of confidence or certainty.We must humbly recognize that we are a long way fromcomprehending the full mystery of even the simplest livingsystems. As observed by the Nobel Prize-winning molecularbiologist Franqois Jacob:

The only logic that biologists really master is one-dimensional. As soonas a second dimension is added, not to mention a third one, biologistsare no longer at ease. However, during the development of theembryo, the world is no longer merely linear. The one-dimensionalsequence of bases in the genes determines in some way the productionof two-dimensional tissues and organs that give the organism its shape,its properties, and ... its four-dimensional behavior. How this occurs isa mystery.13

If we look at our genetic information in terms of computer storagecapacity, our current inability to fully understand our biologicalprocesses is put into simple perspective. We find that a single-spacedtyped page contains 104 bytes of information, while all of the currentlypublished scientific articles contain 1012 bytes, and the sum total ofhuman knowledge of books contains 1018 bytes. In comparison,storing the daily information flow within a single human's bodywould require 1024 bytes of capacity. As observed by Harvardevolutionary biologist Richard Lewontin:

Our problem is that, in contrast to other domains of the physical worldwhere a few strong forces dominate phenomena, the organism is thenexus of a very large number of weakly determining causal pathways,making it extremely difficult to provide complete explanations. 14

Since modem biologists are still a long way from understandingthe true complexity of even a single cell, much less the workings ofcomplex non-linear biological systems, we must exercise caution inapplying the nascent science of complexity theory to complexeconomic systems.

13 See SuzuKI & KNUDTSON, supra note 12, at 329.

14 RICHARD LEWONTIN: IT AIN'T NECESSARILY So: THE DREAM OF THE HUMAN

GENOME AND OTHER ILLUS1O\s xxii (2000).


2. THE INHERENT UNPREDICTABILITY OF CHAOTIC SYSTEMS

The classification of the constituents of a chaos, nothing less here isessayed.

15

Chaos theory describes inherent unpredictability and observes

that extremely complicated, outwardly indecipherable patterns resultfrom small measurable changes within a system. In other words, in

non-linear systems such as biological ecosystems or our economic

system, "many components interact [... ] in complex ways, leading tonotorious unpredictability.... [Moreover,] very slight differences in

initial conditions produce very different outcomes." 16 As aptly

described in folklore:

For want of a nail, the shoe was lost;For want of a shoe, the horse was lost;For want of a horse; the rider was lost;For want of a rider, the battle was lost;For want of a battle, the kingdom was lost.

Nobel Prize-winning brain researcher Roger Sperry and othershave conjectured "that at each layer of complexity in living creaturesthe physical interaction of what we label constituent parts results inIemergent properties'-qualities that paradoxically seem to exceedthe sum of those parts." 17 Just as nuclear physicists, includingEinstein, have been forced to accept inherent vagaries in definingsubatomic particles, biologists are coming to learn that living systemscontain inherent levels of unpredictability and chaos. And theunpredictability appears to become even greater when we look atsystems involving human behavior and choice.

Complexity, chaos, and unpredictability are to be embracedand cherished. 18 Our recognition of the complexity of our worldneed not condemn us to "some mystical, antiscientific world

15 Herman Melville, describing MoBY DICK.

16 ROGER LEWIN, COMPLEXITY: LIFE AT THE EDGE OF CHAOS 11 (1992).

17 SuzuKI & KNUDTSON, Spta note 12, at 327-28.

18 See, e.g., STEPHEN JAY GOULD, WONDERFUL LIFE: THE BURGESS SHALE AND

THE NATURE OF HISTORY 320 (1989) ("[B]iology's most profound insight intohuman nature, status, and potential lies in the simple phrase, theembodiment of contingency: Homo sapiens is an entity, not a tendency.").


view." 19 In the words of one of the self-proclaimed evangelists ofchaos theory, Joseph Ford of the Georgia Institute of Technology:

Dynamics at last freed from the shackles of order and predictability ....Systems liberated to randomly explore their every dynamical possibility ....Exciting variety, richness of choice, a cornucopia of opportunity. 2°

At the same time, however, we must temper our enthusiasm andexcitement about complexity and chaos theory with humility inapplying this nascent science to draw broad conclusions about complexeconomic systems ultimately steered by unpredictable humans.

3. THE DANGERS OF CONFUSING SCIENCE WITH VALUES AND

ASSUMPTIONS Science is ever subject to being seized upon andmisused to support underlying premises and assumptions andimplied values. As noted by Richard Lewontin:

Darwinism, born in ideological struggle, has never escaped from an inti-mate reciprocal relationship with worldviews exported from andimported into the science. No one challenges the claim that evolutionarytheory has had a wide effect on social theory. It is a clich6 of cultural his-tory that the explanation of evolution by natural selection served as anideological justification for laissez-faire capitalism and the colonial domi-nation of the lesser breeds without the law.21

III. THE IMPORTANCE OF ASSUMPTIONS AND VALUESIN ANTITRUST ANALYSIS AND REGULATION

The history of the continuing debates as to antitrust legislationand regulation reveals that how people think about antitrust issues isgenerally tied to their underlying assumptions and premises, as wellas their implied values. 22 For example, in the legislative history of the

Nq SuzuKi & KNUDTSON, supra note 12, at 327.

20 See JAMES GLEICK, CHAOS: MAKING A NEW SCIENCE 306 (1987). Joseph Fordfurther believes that "evolution is chaos with feedback." Id. at 314. He arguesthat "God plays dice with the universe. But they're loaded dice." Id.

21 LEWONTIN, supra note 14, at 306.

See generally Thomas J Horton, Concentration or Diversity? AmericanValues and the Premerger Notification Requirements Section (TITLE II) of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (Pub.L. 94-435) (unpublished2004) (on file with author).


Hart-Scott-Rodino (HSR) Act of 1976, 23 one of the key underlyingassumptions of the proponents, who generally were Democrats, suchas Senator Edward Kennedy (D-Mass.), was that there was "afrightening amount of concentration of power in a few corporatehands, [and] that this had dangerous implications for our social andpolitical, as well as our economic welfare." 24 A second underlyingassumption was that corporate economic power increasingly wasundeserved, and came, in the words of Senator Philip Hart (D-Mich.),"not from hard-nose competition, but from gobbling up a competitorrather than going out and establishing new competition." 25 In general,the HSR proponents shared such implied values as a belief in faircompetition (equality of opportunity), diversity (smaller is better),and fairness (through government oversight).

On the other hand, the opponents of the HSR legislation, whogenerally were Republicans, assumed that the burdens of theproposed regulation "would inhibit the competitive, efficient

23 Decades of efforts to reform, modernize, and improve the ProgressiveEra antitrust laws culminated in 1976, when Congress passed, after furiousdebating, maneuvering, and infighting, the Hart-Scott-Rodino AntitrustImprovements Act (HSR Act). Title II of the three-part Act reformed the 1914Progressive Era Clayton Act, which forbids anticompetitive mergers andacquisitions, by establishing "premerger notification and waiting period"requirements for many mergers and acquisitions. President Ford reluctantlysigned the HSR Act on September 30, 1976. Under Title II of the HSR Act,companies with the requisite respective net assets or annual sales arerequired to notify the Federal Trade Commission (FTC) and the AntitrustDivision of the United States Department of Justice (DOJ) before merging. SeePub. L. No. 94-435, Title II, § 201, 90 Stat. 1390. Title II became known asSection 7A of the Clayton Act, 15 U.S.C. § 18a.

24 122 Cong. Rec. 8975 (1976). Senator Kennedy pointed to "the almostdaily newspaper stories on how these giant corporations have taken thispower and used it to corrupt and illegally influence governments and todestroy many of our traditional values." Senator James Abourezk (D-S. Dak.)added: "I believe that this concentration of economic power is one of the rootcauses of the country's present economic difficulties. This concentration ofpower is the simultaneous cause of inflation and depression." 122 Cong. Rec.15313-14 (1976).

25 141 Cong. Rec. 8143 (1995).


formation and allocation of capital resources." 26 Senator StromThurmond (R-SC) argued that it would "put [...] more bigbrotherism in Government," 27 and that "the assertion that the alleged'concentrated structure of American industry... in part stems frommergers and acquisitions' is not only unsupported by the record, butis contrary to fact."28 The HSR legislation's opponents shared suchimplied values as concentration (bigger is better), free market places(no government interference), and "the survival of the fittest."

Not surprisingly, in the later legislative battles over theNational Cooperative Production Amendments of 1993 to theNational Cooperative Research Act (NCRA) of 1984,29 the sameassumptions and implied values were cited, but on the oppositesides of the legislation. 30 For example, a key driving assumption ofthe proponents was that the Japanese and the Europeans werewinning the long-term economic battle for control of the

26 See Minority Views of the Report of the Committee on the Judiciary,S. 1284 at 210 (May 20, 1976) [hereinafter "Senate Minority SubcommitteeReport"].

27 122 Cong. Rec. 29155 (1976).

28 Senate Minority Subcommittee Report, supra note 26, at 215.

29 In 1993, after four years of spirited hearings and debate, Congresspassed and President Clinton enthusiastically signed the NationalCooperative Production Amendments of 1993, Pub. L. No. 103-42, to theNational Cooperative Research Act of 1984, Pub. L. No. 98-462. The 1993National Cooperative Production Amendments received strong bipartisansupport in extending protection from the full reach of the antitrust laws toproduction joint ventures between competitors. President Clinton, moderateDemocrats and Republicans, and domestic business interests believed thatthey had formed a "real bipartisan coalition to make our economy workagain, to help our business and our working people to move forward in theglobal economy." See Remarks of President Clinton on signing the NationalCooperative Production Amendments of 1993, Weekly Compilation ofPresidential Documents, Vol. 29, No. 23, at 1058-59 (June 10, 1993).

30 See generally Thomas J. Horton, Competition or Cooperation?Encouraging Business Competitiveness in a Global Economy: The NationalCooperative Production Amendments of 1993 to the National Cooperative ResearchAct, AMERICAN CONFERENCE INSTITUTE CONFERENCE ON PHA-MACEUTICAL ANTITRUST

(May 24, 2005).


globalized marketplace due to their government-sanctionedcooperative efforts. 31 Favoring cooperation over competition andconcentration over diversity, proponents such as RepresentativeTom Campbell (R-Cal.) presented the specter of per se treatment inarguing that far more joint ventures would exist in a morehospitable legal environment.32

NCRA opponents such as Senator Howard Metzenbaum (D-Ohio) countered that the durability of the antitrust laws hadhelped protect America's long-term economic and competitive

31 By 1993, Japan was being referred to as "Japan, Inc.," and authors likeMichael Crichton were writing sinister novels about Japan's economicconquest of the Western world. In the 1993 words of Pat Choate, aneconomist and former vice-president for policy analysis at TRW, and directorof the Manufacturing Policy Project, "global competition for Americanentrepreneurs and firms is a bet your company gamble. And we are losing."Production Joint Ventures Legislation: Hearings on H.R. 423, H.R. 1024, H.R. 1025,and H.R. 2264 Before the Subcomm. on Econ. & Com. L. of the H. Comm. on theJudiciary, 103rd Cong. 39-41 (March 18, 1993) [hereinafter House SubcommitteeHearings]. Choate favored cooperation and concentration over competitionand diversity.

32 House Subcommittee Hearings, supra note 31, at 53. Representative

Campbell added that:

Many of the cutting-edge industries for international competitionrequire massive amounts of capital .... This high specific capital costtakes many of these investments beyond the scope of single Americanfirms. The joint venture, or consortium, provides an appealingalternative. Capital costs are shared; market risks are diversified.

Id. at 57.

Judge Frank Easterbrook provided moral support for Campbell and the otherproponents of cooperation:

Cooperation is the basis of productivity. It is necessary for people tocooperate in some respects before they may compete in others, andcooperation facilitates efficient production. The war of allagainst all is not a good model for any economy. Antitrust law isdesigned to ensure an appropriate blend of cooperation andcompetition, not to require all economic actors to compete full tilt atevery moment.

Polk Brothers v. Forest City Enterprises, 776 F.2d 185 (7th Cir. 1985).


prospects. 33 For them, wide open competition was the solution-not the problem.34 They argued that diversity was critical becausesmall companies produce the bulk of new innovations andproducts and benefit from markets that are "free, open andunfettered."

35

The HSR and NCRA debates highlight how personal impliedvalues and assumptions drive the thinking about competition andantitrust regulation. As described below, The Keystone Advantagemisapplies complexity theory and evolutionary biology in support ofthe cooperation/ concentration /efficiencies values paradigm.

IV. REBUTTING THE KEYSTONE ADVANTAGE:COMPLEXITY SCIENCE, CHAOS THEORY, ANDEVOLUTIONARY BIOLOGY SUPPORT AGGRESSIVEONGOING COMPETITION-NOT MONOPOLY

The only argument that has been seriously advanced in favor of privatemonopoly is that competition involves waste, while the monopoly pre-

33 For example, George R. Heaton, an MIT industrial economist, statedin 1989: "To me, the fact of 100 years [of American antitrust laws] suggest adiffering starting assumption, and that is, conservatism. The durability ofantitrust law coupled with its relative resistance to change reflect, in myview, a well-considered wisdom of the American people." HouseSubcommittee Hearings, supra note 31, at 88.

34 Dr. T.J. Rodgers of Cypress Semiconductor Corp. argued that "if theantitrust laws had been relaxed a few years ago at the expense of these start-ups who held their ground in the memory market, the Japanese would havebeen virtually 100% successful in wiping out our semiconductor industry."House Subcommittee Hearings, supra note 31, at 198.

35 Plaintiffs' antitrust attorney (and former San Francisco mayor) JoeAlioto testified that "there's absolutely no question that something like 8 to 9out of 10 of the new products are developed by smaller companies and that 8out of 10 of the new jobs are created by smaller companies." HouseSubcommittee Hearings, supra note 31, at 260. Alioto opined that "[e]veryoneshould have the right to compete and all of our markets should be free, openand unfettered. There should be no fixes." Id. at 250. Mr. Alioto added that"the antitrust laws are our Magna Carta of free enterprises. . They are asimportant to our economic freedom as the Bill of Rights is to our personalfreedom." Id. at 256.


vents waste and leads to efficiency. This argument is essentiallyunsound. The wastes of competition are negligible. The economies ofmonopoly are superficial and delusive. The efficiency of monopoly is atthe best temporary.36

Justice Louis Brandeis warned that "[elvery business requires for

its business health the memento mori of competition from without

f .... as well as] a certain competition from within.... "37 Disagreeingwith Brandeis, and advancing their implied values of collaboration,concentration, and efficiency, conservative economists and juristshave sought to rewrite and ultimately deconstruct America's antitrustlaws by attacking the countervalues of fair competition and diversity.They began succeeding in the 1980s, by trumpeting their values andassumptions as objective economic science.

The Keystone Advantage represents a new assault by the Chicagoschool adherents. Using biological ecosystem metaphors, the authorsargue that dominant firms and monopolies frequently "havepromoted the health of their ecosystems, and have benefited as aresult."38 They conclude that "[slociety would suffer deeply if theseorganizations stopped playing their respective roles (or if competitionor regulation somehow prevented them from doing so)." 3

Ultimately, they "hope that the ideas in [their] book will spur a newlook at antitrust economics, balancing the potential threat of

monopolistic behavior with the value that can be created by aneffective keystone strategy." 40

Although the authors seek to disguise their thesis throughmisapplied evolutionary biology and complexity theory metaphors,their conclusions ultimately rehash the values and assumptions of theconservative economic disciples of Milton Friedman and the Chicagoschool of economics and reaffirm their faith that "collusion agreements

36 Louis D. BRANDEIS, THE CURSE OF BIGNESS: MISCELLANEOUS PAPERS OF LouisD. BRANDEIS 105 (Osmond K. Fraenkel ed., 1934).

37 Yd. at 107.

38 IANSITI & LEVIEN, supra note 3, at 223.

39 Id.

40 Id. at 223-24.


[and monopolies] generally will be destroyed by competition." 41 TheKeystone Advantage highlights the dangers of misapplying scientifictheories and erroneous assumptions to support conservative impliedvalues.

A. Dominant firms and monopolies are not analogous to speciesand should not be immunized against aggressive competition

In biological terms, a species is the "basic unit of classificationconsisting of . . . a population or series of populations of closely

related and similar organisms. In sexually reproducing organisms,...[the organisms can] freely interbreed with one another in naturalconditions, but not with members of other species." 42 A "keystonespecies" is a "species, such as the sea otter, that affects the survivaland abundance of many other species in the community in which itlives. Its removal or addition results in a relatively significant shiftin the composition of the community and sometimes even in thephysical structure of the environment." 43 The Keystone Advantage'scentral thesis is that dominant firms and monopolies frequently arekeystone species in their business ecosystems. The authors arguethat "increasing diversity at [the monopoly firm's] level couldactually destabilize the ecosystem by undermining thepredictability of its foundations and lead f. .. to a loss of diversityat all levels." 44

The scientific theory underlying The Keystone Advantage isseriously flawed. The dominant firms the authors cite cannot beanalogized to biological species. Each has numerous actual or

41 MILTON FRIEDMAN, CAPITALISM AND FREEDOM 131 (40th anniv. ed., 2002).Friedman, however, recognized that "[in the economic area, a major problemarises in respect of the conflict between freedom to combine and freedom tocompete." Id. at 26. Friedman never solved the key values dilemma heposited, and indeed conceded that "monopoly raises., problems for a freesociety." Id. at 120.

42 EDWARD 0. WILSON, THE DIVERSITY OF LIFE 405 (1992) [hereinafter

WILSON, DIVERSITY OF LIFE].

43 Id. at 401.

44 IANsm & LEVIEN, supra note 3, at 71.


potential competitors that are closely related and similar in function,just as there are multiple companies that manufacture and sellautomobiles, tires, and gasoline. It might be meaningful to viewautomobiles and jet airplanes as different economic species, but itmakes no sense to view Ford and GM as separate species.

Biological competition studies have shown that "where

competition occurs at all, it is generally more intense within speciesthan between species." 45 As Auguste Forrel observed, "the greatestenemies of ants are other ants, just as the greatest enemies of menare other men."46 Even keystone species like the Florida alligatorfind themselves engaged in potentially deadly competition on adaily basis with other alligators. Moreover, the total alligator genepool has enabled the species to adapt successfully to manyenvironmental changes. Therefore, The Keystone Advantage's pleathat dominant firms and monopolies should be protected againstaggressive intraspecies competition finds no biological support innature.

lansiti's and Levien's contention that increased intraspeciescompetition at the keystone species level could ultimately harmeconomic "diversity at all levels" similarly lacks any biological orother scientific basis. Biological field studies have found competitionto be more common "in species belonging to stable ecosystems thanthose belonging to unstable ecosystems." 47 Indeed, Wilson and other

biologists have concluded that "impoverished faunas promotedominant species," and that "the fewer the ant species in a localcommunity, the more likely the community is to be dominated

45 EDWARD 0. WILSON, SOCIOBIOLOGY 120 (abridged ed. 1980) [hereinafterWILSON, SOCIOBIOLOGY]. Wilson observes that "[clompetition, as mostecologists employ the word, means the active demand by two or moreindividuals of the same species (intraspecific competition) or members oftwo or more species at the same trophic level (interspecific competition) for acommon resource or requirement that is actually or potentially limiting." Id.at 119.

46 BERT HOLLDABLER & EDWARD 0. WILSON, THE ANTS 398 (1990)[hereinafter HOLLDABLER & WILSON].

47 WILSON, SOCIOBIOLOGY, sutpra note 45, at 120.


behaviorally by one or a few species with large, aggressive coloniesthat maintain absolute territories."'8

Furthermore, "interference [competition] between coloniesbelonging to the same species has the important effect of increasingthe numbers of species that can coexist." 49 Direct intraspeciescompetition also can promote evolutionary specialization, whichultimately "permits the coexistence of species that are ecologicallyidentical in all respects except in the distribution of their fooditems." 50 Perhaps most importantly, "the more species that live in anecosystem, the higher its productivity and the greater its ability towithstand drought and other kinds of environmental stress." 51

Therefore, based on biological studies, sound economics shouldencourage, rather than discourage, intraspecies competition at alleconomic levels, including the purported keystone species (dominantfirms and monopolies) level.

B. Contractually based economic networks are fundamentallydifferent from biological ecosystems

An ecosystem "is an ecological community that includes allorganisms that occur naturally within a specific area. 512 Biologists

48 HOLLDABLER & WILSON, supra note 46, at 423. "'When we think aboutnature we usually think about creatures like us, large vertebrates. Butvertebrates are rarities in the world of nature, compared with insects.' Andants are king of the insects, or at least king of the jungle. A SmithsonianInstitution scientist recently demonstrated that in the tropical forest canopy,ants make up 70 percent of the total insect population." LEWIN, supra note 16,at 173 (quoting Edward 0. Wilson).

41 HOLLDABLER & WILSON, supra note 46, at 423.

'4 Id. at 427. Wilson further notes that in the case of Darwin's finches,"where the species has been forced to compete, it evolved away from itsopponent to fill a special niche, and where it lacked competition it stayed put-- or else evolved in the direction of the opponent to fill both niches." WILSON,

DIvERsITY OF LIFE, supra note 42, at 175.

51 WILSON, CONSILIENCE, siipra note 2, at 322.

52 WILSON, DIVERSITY OF LIFE, supra note 42, at 396. An ecosystem includes

the "organisms living in a particular environment, such as a lake or


have long understood that "[sipecies do not exist independently; theyhave coevolved in ecosystems on which they depend. This means thateach individual species depends on some set of other species for itscontinued existence." 53 Therefore, to fully understand an ecosystem,one must study the totality of the myriad complex interrelationshipsamong the various organisms and the organisms and their physicalenvironment.

The Keystone Advantage correctly recognizes that "[i]nterconnectednessis a rule in biological systems . . [and that this] interdependence isthe foundation of the stability, productivity, and creativity ofbiological systems."54 But they overreach in analogizing dominant ormonopolistic firms in networks to "keystone species critical to thestability of the ecosystem."55

First, "of all the areas of biology and ecology, few are lessunderstood than interspecific dependencies. Ecologists cannot evenidentify all the interdependencies in the systems they understandbest."56 Indeed, The Keystone Advantage's authors admit in a footnotethat "[tihe ecological literature contains many conflicting definitionsof the term keystone, and some debate the extent of its relevance." 57

Even conceding that "the removal of a keystone species causes asubstantial part of the community to decline dramatically,"' 58 theextinction and consequent total loss of a species in nature isfundamentally different from requiring dominant firms to engage in

forest (or, in increasing scale, an ocean or the whole planet), and the physicalpart of the environment that impinges on them. The organisms alone arecalled the community." Id.

53 Bryan Norton, Commodity, Amenity and Morality: The Lim its ofQuantification in Valuing Biodiversity, in BIODIVERSITY 200, 203 (Edward 0.Wilson ed., 1988).

SIANsIT & LEVIEN, supra note 3, at 19.

55 Id. at 68-72.

51 Norton, supra note 53, at 203.

;7 IANSITI & LEVIEN, supra note 3, at 231 n.23.

11 WILSON, THE DIVERSITY OF LIFE, supra note 42, at 164.


horizontal (intraspecies) competition. Such competition helps preventeconomic stagnation. As Wilson notes, "[slometimes other speciespreviously excluded from the community by competition and lack ofopportunity now invade it, altering its structure more."5 9 As discussedabove, keystone species such as the sea otter and the Florida alligatorface harsh day to day intraspecies competition that can result infundamental shifts in key characteristics of the species. As Wilsonnotes, "[ellasticity is the hallmark of Darwin's finches of the Galapagos,for the simple reason that their long-term survival depends on it."60

Furthermore, biological "[flield studies show that as biodiversity isreduced, so is the quality of the services provided by ecosystems." 61

In any event, the critical difference between a business networkand a biological ecosystem is that a business network theoretically isbased on economic freedom and the right to enter into voluntarycontracts. The interrelationships of the various firms in an economicsystem are theoretically subject to constant outside competitivepressures that can constantly introduce variation and expansion intothe economic system through new inventions and developments, aswell as voluntary changes in contractual relationships.

On the other hand, a biological ecosystem essentially is adeterministic food web, "a connection of species that prey on other

59 Id. Wilson adds that biologists reject the extremes of ecosystemswhere "species come and go as free spirits. Their colonization and extinctionare not determined by the presence or absence of other species ... [and oneswhere] the species are so closely interdependent, the food webs so rigid, thesymbioses so tightly bound that the community is one great organism, asuperorganism." Wilson explains:

Ecologists dismiss the possibility of either extreme. They envision anintermediate form of community organization, something like this:whether a particular species occurs in a given suitable habitat is largelydue to chance, but for most organisms the chance is strongly affected-the dice are loaded-by the identity of the species already present.

Id. at 163-64.

60 Id. at 173.

61 Id. at 347-48. Wilson adds that records "of stressed ecosystems alsodemonstrate that the descent can be unpredictably abrupt." Id.


species." 62 Known affectionately as "the circle of life," the system is a

limited chain of deterministic consumption where the top predators

ultimately return back to the soil and water in the form of constituentmolecules. 63 In the "circle of life," there is very little trade (orcontractual negotiation) between an alligator and a fish.

C. The long-term success of economic networks ultimatelyrequires mutual adherence to moral precepts and law

The fundamental difference between a biological ecosystem and ahuman business network is that a business network is based onvoluntary contracts. As explained by Wilson:

Contractual agreement so thoroughly pervades human social behavior, vir-tually like the air we breathe, that it attracts no special notice-until itgoes bad. . For mammals, social life is a contrivance to enhance per-sonal survival and reproductive success. As a consequence, societies ofnonhuman mammalian species are far less organized than the insect soci-eties. They depend on a combination of dominance, hierarchies, rapidlyshifting alliances, and blood ties. Human beings have loosened this con-straint and improved social organization by extending kinship like ties toothers through long-term contracts. 64

As further noted by Wilson, humans' ability to detect cheating helpsensure fair dealing and ethical behavior in contractual relationships.65

62 Id. at 180.

63 As explained by Wilson:

If you track who eats whom in different parts of the web, you willusually find the number of links in the chain to be five or fewer. Forexample, in a marshy glade of the north central states, reedgrass iseaten by short-horned grasshoppers, the grasshoppers are eaten byorb-weaver spiders, the spiders are eaten by palm warblers, and thewarblers are eaten by marsh hawks. Because the grass eats no one andthe hawks are eaten by no one (except by bacteria and otherdecomposers when they die), these two species form the ends of thechain.

Id. at 180.

f WILSON, CONSILIENCE, supra note 2, at 186.

'5 Id. As further explained by Wilson:


The Keystone Advantage's biggest error lies in treating dominant or

monopolistic companies as abstract theoretical entities ("species"), ratherthan as groups of human beings.6 In so doing, the authors completelyoverlook the fundamental importance of ethics and the shared values offairness and trust that drive successful business relationships. Bypromoting ethical behavior and fair dealing, the antitrust laws enablebusiness networks to thrive and prosper unencumbered by the menacesof predatory and anticompetitive behavior.

V. CONCLUSION

Complexity science, chaos theory, and evolutionary biology helpus understand that competition and the diversity it spawns throughincreased adaptability are fundamental to increasing the overallproductivity and stability of both biological ecosystems and complexbusiness networks. Ongoing competition at all levels, including thekeystone levels, is critical to maintaining the long-term health of bothbiological ecosystems and, by analogy, business networks. Thecreation of efficiencies through sheer size or dominance is vastlyoverrated, especially when we recognize that in science, dominantspecies often are found in impoverished ecosystems. 67

Contract formation is more than a cultural universal. It is a human traitas characteristic of our species as language and abstract thought, havingbeen constructed from both instinct and high intelligence. [O]necapacity, the detection of cheating, is developed to exceptional levels ofsharpness and rapid calculation.... More than error, more than gooddeeds, and more even than the margin of profit, the possibility ofcheating by others attracts attention. It excites emotion and serves asthe principal source of hostile gossip and moralistic aggression bywhich the integrity of the political economy is maintained.

Id. at 186-87.

66 As Wilson observes, "[economic] models, while elegant cabinetspecimens of applied mathematics, largely ignore human behavior, asunderstood by contemporary psychology and biology. Lacking such afoundation, they often describe abstract worlds that do not exist." Id. at 318.

67 Ironically, Gould observes that small animals "seem to have an edgein most mass extinctions, particularly in the Cretaceous event that wiped outremaining dinosaurs." GOULD, supra note 18, at 307.


Complexity science, chaos theory and evolutionary biology do not

support the Chicago school adherents' attempts to justify monopolies

and ongoing predatory behavior. Rather, they point to the need for

ongoing competition at all levels of our economic system. The

simplistic conservative economic antitrust models in vogue today are"sealed off from the complexities of human behavior and theconstraints imposed by the environment."6 Divorced from the real

world, they are insufficient in checking dangerous anticompetitive

acts and practices.

We must recognize that the antitrust laws are inherently values-

based, and require a continuing effort to balance competitive valuessuch as competition and collaboration and freedom and fairness.Most importantly, we must keep in mind that the antitrust laws atbottom are designed to regulate human ethics and behavior. Ourcomplex network of interrelated contractual arrangements can onlythrive and adapt if we are willing to behave ethically and fairly, anddemand the same from others.

Nothing less than a consilience between psychology, ethics,economics, and the social and hard sciences ultimately is needed tomake the best societal choices. History has taught us that monopolistscan and do sometimes act greedily and unethically, especially if theythink they can. We must not try to rationalize dangerous andunethical predatory acts as hard-nosed competition and visionarykeystone business practices. Instead, we need to recognize thatmaximum economic diversity and welfare creation will be realizedthrough fair competition and voluntary contractual relationshipsbased on trust, reciprocity, and fairness. As John Donne wrote:

No man is an land, intire of it self; every man is a piece of the Continent, apart of the naine; if Clod bee washed away by the Sea, Europe is the lesse,as well as if a Promontorie were, as well as if a Mannor of thy friends or ofthine owne were; any mans death diminishes me, because I am involved inMankinde; And therefore never send to know for whom the bell tolls; Ittolls for tlee.

t's WILSON, CONSILIENCE, supra note 2, at 214.